Domestic data centre corporations are doubtless to profit considerably from the Budget proposal providing a tax holiday of 20 years, as it can allow them to present providers to international shoppers with out the danger of their overseas earnings being taxed in India, sources stated.
The Budget proposal, which gives a tax holiday of 20 years up to 2047 to any overseas firm that procures data centre providers in India, allays fears of their international revenue being taxed by Indian authorities.
No matter whether or not a world firm units up its personal data centre in India or procures providers from an Indian data centre, the tax therapy would be the identical, thereby making certain full degree enjoying discipline, they stated. The efficient company tax charge in India is 25.17 per cent.
Among the main domestic data centres in India are Nxtra Data (Airtel subsidiary), CtrlS Datacenters, Yotta Infrastructure, and AdaniConneX.
Company tax shall be levied on income made by domestic data centres on revenue earned from providers supplied to international entities and from resale of cloud providers to Indian clients.
In case the data centre is a subsidiary or arm of a overseas firm, the secure harbour margin of 15 per cent will kick in, and company tax shall be levied accordingly.
Sources stated the efficient incidence of tax will practically be identical whether or not the data centre is a subsidiary of overseas firm or promoted by a domestic entity.
To boost funding in data centres, the FY’27 Budget has proposed to present a tax holiday up to 2047 to any overseas firm that gives providers to any a part of the world exterior India by procuring data centre providers in India. Sale of such providers to Indian customers shall be made by means of an Indian reseller entity and taxed appropriately, Budget proposal stated.
It additionally proposed to present a secure harbour of 15 per cent to the resident entity offering data centre providers to a associated overseas firm (who’s offering cloud providers to any a part of the world exterior India), it added.
Which means that tax authorities will settle for with out detailed scrutiny if the working revenue declared by the Indian business is 15 per cent.
Printed on February 8, 2026
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